What this calculator does
A margin loan lets you borrow against shares or managed funds you already hold, using the portfolio itself as security. The lender sets a maximum loan-to-value ratio (LVR), the loan balance as a percentage of the portfolio value, and if the portfolio falls enough to push the actual LVR above that threshold, the lender issues a margin call: pay down the loan, add more security, or have units sold to bring the ratio back down.
The number people underestimate is how little the market has to move. Because the loan balance stays fixed while the portfolio value swings, a fall that looks modest in percentage terms can still be enough to trigger a call, especially on a loan that already started close to the threshold. This calculator works out the current LVR, the portfolio value that would trigger a call, and the interest cost of carrying the loan.
The formula
The current LVR is the loan balance divided by the portfolio value. The portfolio value that triggers a call is the loan balance divided by the margin call LVR threshold, since that is the point where the loan becomes that same percentage of a smaller portfolio. The gap between the current portfolio value and that trigger value, as a percentage, is how far the market can fall before a call.
| Term | Meaning |
|---|---|
| LVR | Loan-to-value ratio: the loan balance as a percentage of the portfolio value securing it. |
| Margin call LVR threshold | The LVR level set by the lender at which a margin call is triggered. Thresholds vary by lender and by the type of security held. |
| Interest cost | The annual and monthly cost of carrying the loan balance at the stated interest rate, before any change in portfolio value. |
The inputs explained
| Field | What to enter |
|---|---|
| Portfolio value ($) | The current market value of the portfolio being used as security for the loan. |
| Margin loan balance ($) | The outstanding balance owed on the margin loan. |
| Margin call LVR threshold (%) | The LVR at which your lender issues a margin call. Check your loan agreement, as this varies by lender and security type. |
| Annual interest rate on the loan (%) | The annual interest rate charged on the loan balance. |
When to use it
Checking how much buffer a portfolio has
Before adding to a margin loan, working out the current LVR and the fall needed to reach a call shows how much room there is before a downturn forces a decision.
Stress-testing before a volatile period
Ahead of an earnings season or a rate decision, recalculating with a lower assumed portfolio value shows whether a plausible fall would already be enough to trigger a call.
Comparing the ongoing cost of borrowing
The annual and monthly interest figures make it straightforward to weigh the cost of the loan against the return the borrowed funds are expected to generate.
Worked examples
Every figure in the tables below is produced by this page’s own calculator at build time, so the numbers and the tool always agree. Select any row to load that scenario.
How the margin call buffer changes with the loan balance
The same $100,000 portfolio with a growing loan balance against it.
| Loan balance | Current LVR | Portfolio can fall by |
|---|---|---|
| $20,000 | 20.0% | $71,428.57 (71.4%) before a call |
| $30,000 | 30.0% | $57,142.86 (57.1%) before a call |
| $40,000 | 40.0% | $42,857.14 (42.9%) before a call |
| $50,000 | 50.0% | $28,571.43 (28.6%) before a call |
| $60,000 | 60.0% | $14,285.71 (14.3%) before a call |
| $65,000 | 65.0% | $7,142.86 (7.14%) before a call |
How the call threshold itself changes the buffer
A fixed $40,000 loan against a $100,000 portfolio, at different lender thresholds.
| Margin call LVR threshold | Portfolio triggering a call | Portfolio can fall by |
|---|---|---|
| 50% | $80,000.00 | $20,000.00 (20.0%) before a call |
| 60% | $66,666.67 | $33,333.33 (33.3%) before a call |
| 65% | $61,538.46 | $38,461.54 (38.5%) before a call |
| 70% | $57,142.86 | $42,857.14 (42.9%) before a call |
| 75% | $53,333.33 | $46,666.67 (46.7%) before a call |
| 80% | $50,000.00 | $50,000.00 (50.0%) before a call |
Questions
What happens when a margin call is triggered?
The lender typically asks for one of three things within a short window: pay down the loan balance, deposit additional cash or securities, or allow the lender to sell part of the portfolio to bring the LVR back under the threshold.
Does the margin call threshold ever change?
Yes. Lenders can and do adjust LVR thresholds on individual securities, particularly during periods of high volatility, which can trigger a call even without any action by the borrower.
Is interest the only cost of a margin loan?
Interest is usually the main ongoing cost, but check for account or facility fees, and be aware that a forced sale during a margin call can crystallise a capital loss at the worst possible time.
Should I borrow right up to the margin call threshold?
Most lenders and advisers recommend keeping the LVR well below the call threshold, since that buffer is what absorbs normal market volatility without forcing a sale.
For a plain-interest calculation on the loan balance alone, see the compound interest calculator. To understand how lenders size borrowing more generally, see the debt-to-income ratio calculator.